In terms of economic output, what happens if resource costs rise significantly?

When resource costs rise significantly, the overall cost of production for businesses increases. This uptick in production costs can lead to a reduction in the quantity of goods and services that firms are willing to produce at any given price level. As a result, businesses may find it less profitable to operate at previous levels of output, leading them to cut back on production. This shift causes the aggregate supply curve to shift to the left, indicating that the economy is producing less at every price level. Consequently, the output decreases as firms respond to higher input costs by reducing their production levels.